US Cuts Deal With Chinese Smartphone Maker ZTE, Despite Opposition From Senators


The fine announced Thursday comes on top of $892 million ZTE already has paid for breaking us sanctions by selling equipment to North Korea and Iran. The legislation would restore penalties on ZTE for violating USA sanctions against Iran and North Korea and block US government agencies from purchasing equipment or services from ZTE or its bigger Chinese rival, Huawei Technologies.

However, Commerce Department spokesman James Rockas told Reuters that "no definitive agreement has been signed by both parties". ZTE purchase key components from US -based companies like Intel and Qualcomm.

The President said the company would have to pay a $1.3 billion fine and change management for the ban to be lifted, and a few days ago, ZTE reportedly reached an agreement with the Department of Commerce.

ZTE's survival has been a topic of discussion in high-level US-China trade talks.

ZTE could not be reached for comment by either Reuters or the Post.

ZTE has promised to replace its board and executive team as part of the deal. "They will pay for those people but the people will report to the new chairman", said Ross. Instead of disciplining all employees involved, the department said, ZTE had paid some of them full bonuses and then lied about it.

And last week, the Daily Beast reported that a day after the president said he wanted to help ZTE, the tech company hired the Mercury Public Affairs firm to lobby on its behalf in Washington.

U.S Senate Democratic leader Chuck Shumer quipped, "By letting ZTE off the hook, the president who roared like a lion is governing like a lamb when it comes to China". Some US lawmakers are already hatching a plan to scuttle the new deal and restore sanctions that stopped US firms from sharing technology and expertise with the company.

One of the U.S. companies caught in the crossfire is Qualcomm Inc QCOM.O , whose products account for the lion's share of chips inside ZTE smartphones.

The Trump Administration still retains "the power to shut them down again" as well, and perhaps most important of all, a "compliance department" of the US Commerce's choosing will "literally be embedded into the company to monitor it going forward".

The US has struck a deal with Chinese telecom giant ZTE, resolving a controversy that had put the Chinese telecom giant in peril.

"We will closely monitor ZTE's behavior", said Ross in the release.

ZTE supplier Oclaro Inc rose nearly 1 percent while Acacia Communications Inc was down 1.5 percent. Of those, $1 billion is the fine and $400 million will be in escrow in case of future transgressions.